Finding new sources of revenue is always important for the growth of a SaaS startup business. And one of the most common ways to do that is through upselling. But it can sometimes look like an intimidating challenge. After all, how would you convince those customers to make the jump? Let’s dive and discover the answers.
How SaaS Upselling Works For Your Startup Business
Upselling is one of the two main forms of expansion revenue strategies that SaaS companies turn to, the other being cross-selling. It is selling a larger package or higher-tier account to your customers. The idea here is that, by switching to these higher-priced packages, you can earn more from each customer.
Image from Tranzzo.,
That is its main difference from cross-selling, which is offering various products to customers alongside the main product. However, it is worth noting that there can sometimes be overlaps. For instance, you might offer a few other products as part of the upsell package.
Why Upselling Matters
Of course, you already know that upselling can bring in more revenue. How it does that is where it gets fascinating. Understanding this will help you know where upselling will place in your overall revenue generation strategy.
Increasing Customer Lifetime Value
Image from Web Engage.
Customer lifetime value refers to the overall earnings you gain from a customer during the entire duration of their stay with you. Upselling helps you raise that value significantly since users pay more each month. That value continuously goes up for each successful upsell.
Reducing Customer Churn
Churn is arguably one of the biggest challenges for a SaaS startup business. Surprisingly, getting customers to go up your product tier helps reduce it. That is because the perceived value of the upsell is higher than previous packages. With that, customers are less likely to cancel tier accounts.
The Challenges Your SaaS Startup Business Faces When Upselling
Of course, getting these benefits is not that easy. After all, you have to convince your users to jump to a more expensive product. The following are some of the challenges that you will encounter
- Attracting the right customers: Often, you get only the most-focused customers. While this is good, it can limit the opportunities you can gain from the strategy.
- Determining the right time: Finding the right opportunity to offer customers and upsell is tricky because each has a different circumstance that affects their willingness to accept the offer.
- The overall perception of upselling: Like other expansion revenue strategies that require you to get people to buy more, customers might think negatively of your efforts first.
To overcome these challenges, you need to be strategic in how you upsell. The idea here is to convince your customers of the offer. That might require some novel approach to persuade them.
How Your Startup Business Should Do Upselling Right
Developing an upselling strategy requires considerable planning. You will be surprised to know that this actually begins with the product design itself. Here, you want to make a product that grows with your users.
That means your product should allow customers to discover new uses as they become accustomed to it. This strategy encourages them to explore it further. Once they find more value than what they initially got, they become more willing to see what higher product tiers have to offer.
Creating The Urge To Upgrade
Even with the above, your customers might not yet be ready to upgrade. Here, you might want to give them a little nudge towards making that decision. There are many ways to go here. Some of them are more subtle, which helps customers feel like they are in control of the situation.
Image from Touch Dynamic.
One such strategy is application discovery. The idea is that you can use the limitations of your software to convince users to upgrade. For instance, you can use warning messages to signal them that it is time to upgrade. Time these warnings so they don’t come in as being too intrusive.
Increasing Their Joy Over Your Product
As you already know, emotions are a powerful driver for buying decisions. In the case of SaaS upselling, you want to focus on increasing their happiness about your product. A great customer experience plays a significant role here. So, if you already have one, you are off to a good start.
But it needs to go beyond that. You need to help them discover new ways to use your service. For that, you need to know how they use your product. You can then offer the right upsell based on those needs.
Virtua Solutions’ customer support team can help you track these changing customer needs. We do that through a combination of direct customer engagements and monitoring online conversations. With that, you can be sure that you know what offers would spark joy in them.
Of course, offering the right offer is just the first part. You also need to make that offer at the right time. The best way to do that is right when they are about to renew their subscription. You can have these as product suggestions right beside the renewal button. Once they see the option they are looking for, users will be quick to grab it.
Celebrating Their Achievements
Another way to encourage your SaaS customers is by celebrating their achievements. For instance, you can remind them that they have accomplished a certain number of tasks using your service. When reminded about these achievements, they are encouraged to try your products more. That allows you to make that offer.
The trick here is to match your upsell offer with the right milestone. In the above example, you can pitch a product tier that lets them accomplish more of the same tasks. Here, it would help to explicitly explain the gains they get from the upsell.
Helping Your SaaS Startup Business Generate More Upsells
Upselling requires a lot of work. And you might find yourself unable to keep up with every upsell opportunity. Virtua Solutions can provide you with a support team for this purpose. Our team of customer success agents will help you create the right environment for your users.
As mentioned above, we begin by helping you gather all the needed customer data. From there, our agents assist in developing the appropriate strategy. We work with your marketing team to implement these.
Our team also understands how great support is vital for getting people invested and willing to shell out more cash. We help you deliver that comprehensive support across all channels. That should convince them to get into your other offers.
As you can see, upselling can give your SaaS startup business a big revenue boost when done right. And Virtua is ready to help you make that happen. Contact us today and we will get started on that ultimate upselling strategy for you.